A Real Look Into The Real Future

sunken container ship front

 

 

 

 

 

If you want to know the economic future, a nice crystal ball is the HARPEX and The Baltic Dry index. Among other things these two tell us shipping activity, pricing, and the movement of consumer goods via container shipping and dry goods used for things like government or commercial needs such as construction (steel, iron, etc.). It can tell us what a future trend may be.

 

HARPEX from http://www.investopedia.com/terms/h/harpex-shipping-index.asp?layout=infini&v=3A

The container ship index of ship brokers Harper Petersen & Co. The HARPEX Shipping Index tracks weekly container shipping rate changes in the time charter market for eight classes of all-container ships. The index was compiled in 2004, but by using a database of 10,000 records, can be calculated retrospectively back to 1986.

BREAKING DOWN ‘HARPEX Shipping Index’

The HARPEX index is considered a suitable indicator of global economic fleet shipping activity since it tracks changes in freight rates for container ships over broad categories. This index is slightly different than the better-known Baltic Dry Index that tracks freight costs for dry bulk ships that usually carry bulk cargoes and raw materials such as coal, ore and grain.

–ENDS.

One look at the chart below and you can see the HARPEX is down…consumers are not buying, manufacturers will stop making, layoffs and closures are on the way.
harpexChart-1

 

 

 

 

Baltic Dry Index from: http://www.investopedia.com/terms/b/baltic_dry_index.asp?layout=infini&v=3A

A shipping and trade index created by the London-based Baltic Exchange that measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea. The Baltic Exchange directly contacts shipping brokers to assess price levels for a given route, product to transport and time to delivery (speed).

The Baltic Dry Index is a composite of three sub-indexes that measure different sizes of dry bulk carriers (merchant ships) – Capesize, Supramax and Panamax. Multiple geographic routes are evaluated for each index to give depth to the index’s composite measurement.

It is also known as the “Dry Bulk Index”.

BREAKING DOWN ‘Baltic Dry Index – BDI’

Changes in the Baltic Dry Index can give investors insight into global supply and demand trends. This change is often considered a leading indicator of future economic growth (if the index is rising) or contraction (index is falling) because the goods shipped are raw, pre-production material, which is typically an area with very low levels of speculation.

Because the supply of large carriers tends to remain very tight, with long lead times and high production costs, the index can experience high levels of volatility if global demand increases or drops off suddenly. The Baltic Exchange also operates as a maker of markets in freight derivatives, a type of forward contract known as FFAs (forward freight agreements) that are traded over-the-counter.

–ENDS.

20160105_BDIY_0

 

 

 

 

Looking at this chart one might decipher global economies are not growing with any significance any time soon.

In short, yes trouble is indeed over the horizon. Batten down your financial hatches and secure your assets.

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